Friday, July 29, 2016

"Meredith McIver" is allegedly a public speaker who apparently is too timid to speak to the public. Whether she existed or not was briefly the subject of speculation a week ago when a letter was produced by the Trump campaign in which she took the blame for plagiarism in Melania Trump's convention speech.

Once it was established that there actually, apparently is (or was) a Meredith McIver, the whole plagiarism flap -- with its denials and fabrications -- was sent to the memory hole for shredding and incineration.

"It was all a joke." or some minion in the bowels of The Trump Organization "took responsibility" [without, of course, having to, you know, take any responsibility]

One of the mainstays of the Trump campaign -- and of the right-wing propaganda wurlitzer in general -- is the devaluation of truth. This is not simply a matter of saying things that aren't true for political advantage. It is an enduring strategy of demonstrating the futility of standards of truth, rightness and truthfulness because they realize that communicative rationality is not their friend.

It is not enough for them to "get away" with a falsehood. The point is to show that the truth does not matter. This is not mere dishonesty. It is an assault on the idea that there is any criteria for distinguishing between truth and falsehood.

There were 5 burglars arrested on June 17, 1972 at the Watergate offices of the Democratic National Committee.

James McCord plus 4 men from Miami. I guess one could say Nixon had the dignity of hiring domestic workers. But a lot of Republicans favor free trade and outsourcing when foreigners have a comparative advantage. So maybe when they stop claim Trump was only clowning around, they will give him credit for moving away from his protectionist stance.

Tuesday, July 26, 2016

Germany today is a parliamentary democracy. However, within the Eurozone some find that Germany exercises power over macroeconomic policy by other nations also in it that reminds them of an earlier more authoritarian Germany that dominated their policies, with such views especially strongly held in Greece since that nation's last crisis. German Finance Minister, Wolfgang Schauble, has been accused particularly accused of exercising such power in budgetary policymaking and enforcing an austerity policy on the nations in the Eurozone that has exacerbated recessionary tendencies within the Eurozone, especially for nations with heavy debt burdens such as Greece.

There is a curious irony in the accusations made against Schauble in particular. He sits in the same office and even at the same desk in an ugly grey building in Berlin that Nazi Air Marshall Hermann
Goering used after 1936 when the construction of this ugly structure was completed by the Nazis. Somehow this structure survived allied bombing in World War II, after which it was located in the Soviet zone adjacent to where the Berlin Wall would later be located. It was where in 1949 the former East German Democratic Republic was declared and from where it was ruled.

There is neither a swastika nor a hammer and sickle hanging today behind where Schauble sits in Goering's old office, but it is widely claimed that the desk there is still the one used by Goering.

I always Google my headline ideas to try to avoid the appearance of plagiarism. I was thinking of the title for this post as I was looking at a cartoon adaptation of Hayek's The Road to Serfdom, originally published by Look magazine in 1945 and subsequently distributed in the 1950s as a pamphlet by the General Motors Corporation. As Ned O'Gorman explained,

"The Look version departed far enough from Hayek's original text that it hardly merited the same title. Nevertheless it did present the outlines of a popularized version of the neoliberal account of legitimation crisis that Hayek articulated."

Dick Meyer's very fine essay The road to Trumpdom: The backstory of the biggest character in politics takes its cue from a Hayek quotation, "As is so often true, the nature of our civilization has been seen more clearly by its enemies than by most of its friends." Meyer traces the Republican dysfunction to the elevation of the primaries in American presidential politics, the reality TV show vulgarity and celebrity-adulation of American popular culture and ultimately to the long-term decline, since the 1960s, of Americans' trust in government.

Meyer's essay concludes with the decline in trust but doesn't elaborate on the reasons for it. Of course, this has been a well-worn topic, with contributions ranging from Jurgen Habermas's thesis of Legitimation Crisis to Michel Crozier. Samuel P Huntington and Joji Watanuki's diagnosis of an "excess of democracy."

My own view hearkens back to the nominal success of the O,E,C,D, growth target and its substantive failure. Under pressure from the U.S., the newly fledged institution adopted a target of 50% during the 1960s. Inadvertently, they exceeded this target by around 5%. I say "inadvertently" because when they adopted the target in 1961 they really had no idea what it meant. It just seemed like a good idea at the time.

In the meanwhile, all sorts of social, environmental, political and financial difficulties emerged that GNP growth was obviously not solving -- some of them growth was exacerbating. And then the decade of the 1970s failed to repeat the economic growth "success" of the 1960s. Economic growth, it turned out, was not the promised panacea. On the other hand, lack of economic growth just made things worse.

Here is were the cartoon version of The Road to Serfdom comes into its own. "The 'Planners' promise Utopia..." is the title of panel 3 "...but they can't agree on ONE Utopia" concludes panel 4.

In the comic book Hayek, this lack of consensus immediately leads to an impasse that can only be resolved by a strongman. In real life, the lack of consensus about concrete Utopias was resolved by targeting economic growth. A rising tide would lift ALL boats. "Everybody will be happier that way," as Henry Wallich later reaffirmed, because:

Growth is a substitute for equality of income. So long as there is growth, there is hope, and that makes large income differentials tolerable. The environment will also be better taken care of if the economy grows. Nothing could cut more dangerously into the resources that must be devoted to the Great Cleanup than an attempt to limit resources available for consumption.

Well, growth has turned out not to be a "substitute for equality of income." Most growth for three or four decades has gone to those at the top and large income differentials have just gotten larger and larger and larger -- not more tolerable. The expanded resources have not been devoted to "the Great Cleanup" -- a not insignificant amount has been devoted to denying the necessity for any cleanup whatsoever. The environment is a hoax.

The latter view is understandable in that the "planners" have taken over the environment with much the same rhetoric that they invested in economic growth. "Green Growth" is predicated on exactly the same growth paradigm. Immigration enlarges the size of the pie -- there is not a fixed amount of work to be done, don't you know -- without doing much for the slice that goes to those who aren't at the top.

Monday, July 25, 2016

In Doctor Strangelove, General Ripper explains to Captain Mandrake why Clemenceau's dictum on war is now obsolete:

He said war was too important to be left to the generals. When he said that, 50 years ago, he might have been right. But today, war is too important to be left to politicians. They have neither the time, the training, nor the inclination for strategic thought.

Oddly enough, it was not generals who were at the forefront of strategic thinking but academics like Henry Kissinger, Herman Kahn, Thomas Schelling and Daniel Ellsberg. Meanwhile, liberal politicians had concluded that the economy was too important to be left to the economists -- let alone to the unscripted dealings of consumers and producers. Soon after Kennedy's inauguration, signs appeared in the Commerce Department asking, "What have you done for growth today?" [implicitly: ask not what growth can do for you...]

The American proposal of a coordinated decade growth target for the countries in the newly formed Organization for Economic Coordination and Development was controversial. The Secretary-General of the OECD, Thorkil Kristensen, the British, Canadian and Belgian delegations were skeptical. There had even been doubt raised in the U.S. Treasury Department about "the focus on GNP as a measure for progress and the propaganda value of a target below an unrealistic average growth rate of 5 percent annually" (Schmelzer, p. 175).

Nevertheless, the U.S. delegation was determined to announce an OECD growth target as a riposte to the Soviet Party Congress's grandiose plans announced for 1970 and 1980. Somehow the proposal and opposition to it were leaked to the press. The Americans were widely suspected. As Matthias Schmelzer details The Hegemony of Growth (2016), the leak changed "the entire dynamic of this discussion":

The entire dynamic of this discussion suddenly changed when OECD bureaucrats and delegates learned that immediately before the MCM [ministerial meeting] the US proposal to set a growth target had leaked to the press. First in the New York Times and then around the world, newspapers were analyzing the viability and hidden motives of the target and reported on the different views on the proposal among OECD member countries. In all articles the initiative was interpreted as a direct response to Khrushchev’s announcements, an allegation the US delegation denied. The press was generally skeptical, in particular in Europe, and argued that the proposal was unrealistic. Characteristically, the German business daily Handelsblatt stated that member states did “not at all command the necessary economic policy instruments to force onto their industry and agriculture a specific growth rate.” Furthermore, there was some fundamental critique. For example, John Allen complained in the Christian Science Monitor that the growth target set by the OECD could not be achieved because the US had “grown nearest the top of the tree.” Arguing that the richest nations have “the ‘worst’ growth rates” and that for America and Britain growth rates were bound to decline, he stated: “The United States already has run a race and won. It does not have to accept the challenge to the same race over again, against a fresh runner.” Instead, the US should focus on improving the quality of education and housing, on alleviating poverty, and aim “to lift the underdeveloped countries up to Western standards.” Irrespective of these more nuanced critiques, the prior leak of the US plans put immense pressure on OECD ministers. Although it was not stated explicitly in the debates, at least the German delegation seems to have interpreted the leak as an intentional act of the US delegation to get agreement on its “propagandistic” target. At the meeting the German Economics Minister Ludwig Erhard accordingly complained that it was “improper that Ministers should read in the newspapers of the previous day and the day before what they were to decide that day.”

It is interesting to note that within all the extensive discussions among OECD experts and the key economists from member countries, the idea that a distinction could be made between absolute and relative growth numbers, between the size of an increase of the economy and the rate of increase, had not been brought up. Although no one expected the US and Britain to grow at the same rate as Italy or Japan due to the possibilities for catch-up, the shared assumption was that given the right policies growth rates could be stabilized between 4 and 5 percent annually for all countries, irrespective how rich they were and how large their economies had already grown. The growth rate dominated economic policy debates in the 1960s, exponentiality was the implicit ideal, not linearity.

So that is how co-ordinated growth targeting first leapt onto the world stage -- as a panacea propaganda stunt without the technical know-how for accurate forecasting, targeting or policy selection to meet the targets. By happenstance, the OECD countries came close to meeting their joint 1960s growth target. The econometric analysis and policy prescriptions came as an afterthought.

In terms of enshrining the hegemony of economic growth as a policy imperative, the OECD growth targeting has to be judged a success. What that means in terms of global financial stability, the demise of the Bretton Woods system, environmental and social impacts is another question. But what struck me as I was reading Schmelzer's documentary account the 1961 decision is how much the concept of greenhouse gas emissions reduction targeting mimics the American proposal for economic growth targeting. This is not a good sign.

Saturday, July 23, 2016

If I told you that Trump lies a lot – you might laugh that we all know that. But it is interesting when even the Wall Street Journal is refuting the latest from the Trump campaign. As soon as Hillary Clinton picked Tim Kaine as his running mate, Team Trump decided to rehash how employment growth has been awesome in Indiana (since Mike Pence governed that state) while employment in Virginia has somehow tanked. Of course Indiana employment has grown only 2.6% since December 2007 while Virginia grow by 3.6% over this period. Trump is fact challenged as this WSJ blog also notes:

While governor, Virginia’s economy outperformed the U.S. in several key measures…When the U.S. economy fell into recession in 2008 and 2009, Virginia’s economy still managed to expand, albeit slightly. The state’s economy grew 0.1% in 2008, versus a 0.3% decline for the U.S., and advanced 0.5% in 2009, when the U.S. economy contracted 2.8%...When Mr. Kaine took office in January 2006, Virginia’s unemployment rate was 1.5 percentage points below the national level. When he left office, the state’s rate was 2.4 percentage points below the U.S. rate…Employment in Virginia grew robustly during Mr. Kaine’s first two-and-half years as governor, expanding 4% between January 2006 and July 2008. Employment fell sharply during his remaining time in office, but never sank below the level he inherited. Conversely, total U.S. employment only recovered to the January 2006 level in late 2012.

Since 2007, employment growth nationwide has been very modest and employment growth for Virginia has been about the same. Indiana on the other hand has seen awful employment growth over this period. But do not expect Donald Trump to tell you the truth about this or anything else.

Friday, July 22, 2016

The Republican national convention has now ended, and it marks another major move in the descent of America to becoming a becoming a banana republic, setting by far a record for failing to approve presidential judicial appointments, little outcry from the public. It also has included for the first time a member of Congress yelling "you lie" during a State of the Union speech (which was a false charge, to boot).

Now we are going to become like Russia and Turkey and authoritarian corrupt nations where the winner of a presidential election throw his opponents in jail or worse. It is not just that this is the first US convention where there has been a call to jail the main opponent, but the favorite chant of the has been that: "Lock her up!" And then we had the one who wants her shot.

To make this all worse, she is not even guilty of what they claim are her crimes, and speakers told repeated lies about it. This is a very new low.

Thursday, July 21, 2016

The Wall Street Journal is generating an orgy of lump-of-labor headlines. Yesterday there was The Rise of Zero-Sum Economics by Greg Ip. Today, on the Real Time Economics blog there is What if There Just Aren’t Enough Jobs to Go Around? by Anna Louie Sussman. The latter article is substantive, with a discussion of a study by Marshall Steinbaum and Mike Konczal. Ip's article is polemical claptrap objecting to the polemical claptrap of the Republicans and Democrats.

With his banal -- and fallacious -- supposition that the "opposite" of win-lose (zero-sum) is win-win, Greg Ip indicates that the sum of his understanding of game theory is zero. Actually, the interesting thing about non-zero-sum games is that they present the players with dilemmas, such as the prisoner's dilemma or Garrett Hardin's tragedy of the commons.

The Sandwichman discussed the polemical use and abuse of game theory terminology in a series of posts back in April under the collective heading of "Zero-Sum Foolery":

Pretending to refute the perception that there is "only so much work to go 'round" is a boilerplate canard that the Sandwichman tackled back in 2005. In theory, of course, there is no inherent limit to the amount of work to be done. How that actually plays out in practice, however, is another matter. It depends.

For two and a half centuries, propagandists have laboriously blurred the distinction between propositions and perceptions in order to demonstrate that those they disagree with are stupid. Some of the commenters on Sussman's article appear to have been indoctrinated to that well-worn refrain:

"Tired of the whiners about 'no jobs'. Slothful gluttonous slugs by no other name."

"Sounds like a 'study' designed to reach the preconceived conclusion of progressives."

"You can't believe something this silly. That would imply that all consumer demands have been fulfilled, Nirvana is here. Such utter nonsense."

A multi-level marketer who peddles pseudoscience—and whose product is endorsed by America’s leading conspiracy theorist—is scheduled to speak in a primetime slot Wednesday at the Republican National Convention. Michelle Van Etten was presented by the RNC in a Sunday evening press release as a “small business owner” who “employs over 100,000 people.” That’s roughly 1.5 times the number of employees Apple employs in the United States, making it a highly unlikely claim. For such a supposedly large employer, she has flown under the radar—until the announcement of her speech at the convention, there was no record of her business work in the press. Van Etten is involved in selling products that claim to improve health and even fight cancer, all based on dubious science. And as you peel the story back, every single layer is fascinating: there’s Alex Jones hysteria, pyramid-scheme-style marketing, and questionable Clemson University research.

Products that improve one’s health based on dubious science takes me back to the Gero Vita scam:

Almon Glenn Braswell (1943-2006) sold pills and potions through the mail. He probably took in more money and more people than any similar marketer in U.S. history. This article details what he did, looks at connections he had with prominent politicians, and describes some of the actions law enforcement took against him…Some of the products may have had some effectiveness (though overpriced), but most were promoted with misleading claims. .. One reason for Braswell's commercial success was his association with health professionals whom he listed as advisors and/or authors of articles in his publications.

In short – his firm was selling snake oil. It also found a way of dodging taxes that drew criminal complaints from the IRS. And of course the political connections:

Braswell had connections to George W. Bush and George's brother Jeb Bush, when he was Governor of Florida. Braswell and his companies have donated a total of at least $220,000 to their campaigns and to the Republican Party

Wednesday, July 20, 2016

John Fitzgerald offers a lot of insights on the Irish GDP accounting issue:

The so called “patent cliff”. Because the pharmaceutical sector accounts for a substantial share of Gross Value Added (GVA), developments in the statistical treatment of the sector can have a significant impact on the national accounts: for example, if patents on major drugs produced in Ireland run out…multinational enterprises have grown in importance. When they operate in countries outside their home location, the profits earned by those companies in the foreign destination properly belong to the shareholders in the company, rather than to the residents of the country in which the profits are generated. This drives a wedge between GDP and GNI/GNP as the profits, net of tax, are remitted to the shareholder.

Thirty million prescriptions were filed last year for the anti-depressant Lexapro, made by the U.S. pharmaceutical company Forest Labs. According to a story in Friday's Bloomberg Businessweek, most of the profits from that drug were transferred overseas, thus avoiding having to pay taxes in the United States. The news is shocking to Lexapro customers like Tyler Hurst, who buys the drug at a Phoenix pharmacy. "It does not say, 'The profits of this go outside the country,' anywhere," said Hurst as he looked at the drug bottle. "It is shady."

The makers of the popular antidepressant Lexapro (escitalopram) reported a net loss in sales resulting from expiration of the drug’s patent in March 2012. New York-based Forest Laboratories disclosed that it lost $153.6 million, or 58 cents per diluted share, in the fiscal quarter that ended in December 2012.Lexapro rose to popularity soon after its release in 2002, earning $13.8 billion for Forest Laboratories in the span of a decade. The antidepressant has routinely made up over half of Forest’s sales. It made almost $600 million in the quarter that ended in December 2011. Then, following the release of the generic version of escitalopram in March 2012, Lexapro’s sales plummeted 97 percent to $20.3 million in the third quarter ending in December 2012.

Lexapro was manufactured in Ireland for production costs near 25 percent of sales but sold to the U.S. at a transfer price near 70 percent, which left the U.S. distributor with low profits after selling expenses. The IRS did notice and argued that the transfer pricing should reflect only production costs plus a modest markup to cover the cost of capital on the Irish tangible assets. Clearly a lot of these profits before the expiration of the patent were due to intangible assets, which the IRS argued were U.S. owned. We see similar financials for medical device manufacturers such as Medtronic and Guidant. While I linked to the taxpayer’s petition to the Tax Court for the latter, let’s refrain from commenting on an ongoing litigation but rather note the Medtronic decision:

The U.S. Tax Court handed Medtronic Plc a victory in a $1.4 billion dispute with the Internal Revenue Service over how much of the medical device maker’s profits should be taxed by Puerto Rico and how much should face higher federal taxes instead…The case involved transfer pricing, or the rules that govern transactions between different arms of the same company. Corporations must make such transactions as if they were engaged in arm’s length deals between unrelated companies, and allocate income where it is earned, depending on which entity truly generates the profits. But those standards frequently lead to fact-intensive disputes with the IRS. In this case, the company and the government were arguing about the proper methods for determining how profits should be split between foreign and domestic operations.

Let’s put this in context with a simple example. Suppose that the U.S. parent sells $10 billion in products incurring $2 billion in selling costs, while the foreign (tax haven) manufacturer incurs $2 billion in production costs with overall profits being $6 billion. Let’s also assume that a distributor would be granted $500 in profits while a contract manufacturer would be granted another $500 million in profits. Transfer pricing geeks would say we have $5 billion in residual profits. The IRS thinks that the foreign manufacturer should pay a royalty equal to 50 percent of sales capturing all residual profits. The representatives for these highly profitable multinationals are arguing for royalty rates of only 20 percent of sales which would leave most of the profits with the tax haven even though the facts seems to be that all intangible assets were created in the U.S. Of course these profit margins pale in comparison to what Gilead receives on its new hit treatments:

A new investigative report finds that in the last two years Gilead Sciences has raked in billions in profits from exorbitantly priced hepatitis C medications that were developed with taxpayer dollars, and then shifted those profits to offshore tax havens where it dodges U.S. taxes….The report found Gilead’s sales and profits have soared since the drugs launched, while its tax rate has plummeted. Gilead’s worldwide revenues recently tripled—from $11.2 billion in 2013 to $32.6 billion in 2015. Corporate pre-tax profits soared even more: rising from $4.2 billion to $21.7 billion from 2013 to 2015, a five-fold increase. But, over the same period Gilead’s worldwide effective tax rate plummeted by 40%—dropping from 27.3% in 2013 to 16.4% in 2015.

This report accuses Gilead of tax dodging as it assumes the U.S. parent paid Pharmasset $11 billion for the phase II rights:

“For Gilead to give up effectively one-third of their value for an unproven asset still subject to significant ongoing clinical risk seems remarkable,” Porges, who is based in New York, wrote today in a research note. The company is “likely to be treated harshly by investors for apparently ‘top ticking’ the most visible asset in the market.”

This was a risky gamble that paid off. But my understanding is that the Irish affiliate purchased the phase II rights and then funded the remaining R&D. Regardless of who is right on the transfer pricing issue, the success of these Hepatitis C treatments represented a dramatic increase in value-added.

"Trump himself has not (yet) plagiarized anything." Karen Topham wrote at Huffington Post.

Let's reconsider. Plagiarism is misrepresenting someone else's writing as your own. If a student in one of my classes hired a "ghost writer" to write their term paper, it's plagiarism. But it is O.K. if some celebrity does it. I get it.

Tuesday, July 19, 2016

It should come as no surprise that the objects of plagiarism are typically banal, trite and intellectually worthless themselves. Shallow minds seek out shallow expressions. If there is one double plus good side to Melania Trump's wholesale plagiarizing of Michelle Obama's 2008 convention speech, it is that it reveals the utter vacuity of the original:

...you work hard for what you want in life, that your word is your bond and you do what you say you’re going to do. That you treat people with dignity and respect... the only limit to the height of your achievements is the reach of your dreams and your willingness to work for them.

A little Rocky theme music, please? Blech! What vacuous tripe. And this is what Ms. Botox-Robot's ghosts thought worthy of driveling from her tiny, perfect lips?

Friday, July 15, 2016

I read with interest your column, Jennifer, which led me to your chapter, John, in Blueprint for America on trade and immigration. I have studied the history of the lump-of-labor fallacy claim for nearly 20 years and have have published several articles dealing with that history. I have to wonder if there is any other assertion that has endured for so long, produced so little evidence, ignored all refutation and enjoyed so much authoritative consensus as the lump-of-labor fallacy claim.

Let me repeat, so as not to be misunderstood: I am talking about the bogus fallacy claim and not the fallacy itself. The claim consists of two parts, one of which is self-evidently true and the other of which is not proven. The self-evident part is that there is not a fixed amount of work to be done. The unproven part is that belief to the contrary -- that there is only so much work to be done -- is the driving force or the "idea behind" opposition to some policies and support for others.

Not proven is an understatement. In my research of 236 years of the fallacy claim, I have come across very few examples of claimants offering any evidence whatsoever for the existence of the belief. In a virtuoso display of circular reasoning, support for or opposition to particular policies is offered as prima facie evidence for the fallacious belief, which is then posited as the motive for support or opposition to those particular policies.

The claim has been refuted definitively by several economists, including A. C. Pigou and Maurice Dobb, but claimants have never addressed or even acknowledged those counter-arguments. Last month, Omar al-Ubaydli of George Mason University and the Mercatus Center attributed advocacy for shorter hours of work to belief in the lump-of-labor fallacy. I subsequently invited Omar to an ethical debate on the substance of the fallacy claim. I would like to extend the same invitation to John Cochrane. Here is an overview of my exchange with Omar.

A few days ago, in an interview in Foreign Affairs, Kwasi Kwarteng, a Conservative member of parliament in U.K. made some very perceptive remarks about whether people's perceptions were driven by belief in a lump-of-labor or by other perceptions, regardless of whether those perceptions are accurate:

A lot of clever people talk about the “lump of labor fallacy” and all the rest of it, but there are lots of different economic theories involved. But the perception was what drove the politics, not the economic theory. In large parts of rural England—a town like Boston, which your own town of Boston is named after—the perception was that things were changing, life wasn't getting better for quote-unquote indigenous people, and they voted against that.

The perception that "life is not getting better" is subjective and is in comparison to some retrospective expectation -- life has not improved "as much as I thought it would." Economists are saying a rather astonishing thing when they "view with contempt" the presumably rational economic actors' satisfaction and expectations. They are claiming that subjective utility is wrong. Think about that.
Cheers,

Thursday, July 14, 2016

On July 11 Senator Elizabeth Warren (D-MA) gave a speech in the US Senate denouncing funding of global warming denying scientists and publicists and related think tanks by fossil fuel companies and related interests. I am not going to comment on that for the simple reason that some of these people and their political allies claim that those arguing there is global warming are also receiving funding from biased sources in a public choice sort of manner. Rather I think that people's arguments should be judged on their own grounds, not on who is or is not funding the research.

As it is, Warren's speech has triggered some very bizarre and extreme discussion in various quarters of the internet, especially by libertarians unhappy with her. Among the claims floating around on Facebook and elsewhere of demanding that the people she criticized should serve jail time. This claim is simply false, she said nothing along such lines. Probably the source of these claims is that she was speaking in favor of a bill (that will not pass) to investigate funding by entities such as Exxon Mobil of research that questions global warming when their own internal data agrees that there is global warming and likely due to human actions. But this is against these companies, not the scientists and individuals involved. As it is I want to look at what she did say and how it relates to the latest developments in the ongoing arguments over global warming.

(BTW, I prefer this older terminology, which indeed highlights the central issue, with "climate change" being a misleading and frankly stupid label, given that climate is always changing. The question is how and why and in what direction is it changing, apologies to all who have gotten all into saying "climate change" when what they really mean is "global warming." (and, yes, I know that overall global warming coincides with cooling in certain specific locations, tough))

Sen.Warren spent quite a lot of time on the general issue of funding by fossil fuel companies, but in the end her specific comments focused on two individuals and one think tank, the Science and Public Policy Institute (which called the "Institute for Science and Public Policy"). In fact she did not talk about its funding (which is obscure, although it is thought that Exxon Mobil has provided some), but in fact focused more on the two individuals, both of whom have served as Science Adviser of the institute. Both are prominent global warming deniers, but differ substantially from each other despite agreeing broadly on the climate issue.

The first is Willie Soon, an aeronautical engineer who has published articles in seriously respectable climatology journals, even if very controversial articles. In recent years he has received over a million US $ in funding from fossil fuel companies and related sources, and Warren highlighted this. But I think the real question is why he has been unable to get funding from more conventional sources, a point that his supporters would say is due to prejudice and bias against his views by those sources, a reason why I do not want to focus just on these sources. So, what is Soon's argument?

He is probably the leading advocate of the idea that most changes in average global temperature are driven by changes in solar radiance, which is thought to be strongly correlated with sunspots, ironically, that more sunspots indicate more radiance and hence higher average global temperatures. He made this argument in a major paper published in Climate Research in 2003. This paper triggered a lot of controversy, including at the journal, where members of the editorial board resigned over its publication. However, this is not a simple matter. For one thing, it is widely accepted that there probably is a relation between more sunspots and higher global temperatures, with the low sunspot activity and the global cooling during the "Maunder Minimum" period in the late 1600s and early 1700s and example, with Soon writing a book about this. The problem has been with his claim (along with several coauthors) that this is little input from human activities, with the solar flux being the major driving force, including right now.

This is where Soon has gotten into trouble with serious scientists who accept that there probably is this relation between solar radiance/sunspots and global temperature. What has happened since 2003? Well in fact we have been seeing a noticeably lower level of sunspots, which according to Soon's view should lead to global cooling. Now indeed it may have had such an effect, with this possibly explaining the slowdown in the rate of average global temperature increase that occurred during 2003-2009 or so. Of course some global warming deniers made much of this slowdown and even said it might turn into outright cooling.

But here is the rub, to the extent this slowdown in sunspots was leading to more cooling, it did not fully offset the global temperature trend. Something else kept it going up, even if more slowly for a few years. The obvious main factor is human activity, especially further accumulations of greenhouse gases. Then we have what has happened in more recent years: global average temperature increase has re-accelerated to a dramatic level. Soon's sunspot effect has simply been completely swamped. This has led to a complete collapse in any support for his broader argument among most climate scientists. It is no wonder that he is unable to get any funding from conventional sources.

Then we come to the other individual, and on this one I think Warren has him dead to rights, although with him funding sources are not the main issue. We are talking about Christopher Monckton, Third Viscount of Brenchley, former Director of Research for the UK Independence Party, and Soon's successor as Science Adviser at the Science Institute for Public Policy. Lord Monckton has testified three times before US congressional committees on global climate issues, usually following the arguments of Soon, with at least one congressman (according to Warren) declaring him to be the "world's leading expert" on these issues. Oh, serious gag.

For starters, unlike Soon, he has zero scientific credentials to discuss any of this in any serious way other than as a gasbag publicist and PR propagandist. His academic degrees are in classics and journalism. He has been around and has had quite a history on many things, most of which are irrelevant to this point. But something that may not be irrelevant is that he is a major fraud and charlatan. He has repeatedly claimed to be a "member of the House of Lords" in Britain. Well, he is not. He is a peer due to inheritance from his late father, but since 1999 peers by inheritance are not automatically members of the House of Lords, and indeed the vast majority are not,although some are. He is among those who are not.

Regarding his discussions of climate issues, he has engaged in extreme rhetoric regarding scientists who disagree with them. He is a conspiracy theorist charging them with seeking a "totalitarian world government" and also being akin to "Hitler Youth." This sort of stuff is standard for hysterical Fox News commentators and radio hacks, but is completely unacceptable in scientific discourse. Apparently he accepts that humans do generate gases that tigger a greenhouse effect, but like Soon he argues that this is unimportant, and that "global warming is a myth."

Let me note that not all "climate contrarians" are in the same pile of poop that Soon and Monckton are. Thus we have Patrick Michaels who directs climate research at the libertarian Cato Institute. Michaels, whom I have known for more than 40 years, has published in journals such as Nature and Science and has made serious criticisms of details of widely used climate models. Despite that he has long accepted that global warming is happening and that human activity is substantially contributing to it. However, he has long argued that the rate of temperature increase will probably not be as great as the mean forecasts of the main international groups, and he has also gone further to argue based on his libertarian position that the costs of actions are likely to outweigh the benefits. Evidence from the last few years suggest that he may be wrong about the temperature projections, although anything can happen and he might yet be proved right. As for the bottom line policy issue, I have long pointed out to him that he is a climatologist and not an economist and should probably stick to that (I recognize that there are serious and ongoing debates over exactly what should be done).

As for all these weird and paranoid charges that Warren (or others) are seeking to put Soon and Monckton (and others?) in jail, this appears to come from Sheldon Whitehouse calling for lawsuits against the major companies involved in funding global warming denying research. But lawsuits do not imply jail time. I suspect that the source of this is from the behavior of their own allies, in particular, Senator James Inhofe. In 2010, when emails by Michael Mann and James Hanson were hacked leading to the "Climategate" rhumba that supposedly showed plots and conspiracies to bias scientific research, Innhofe called for the US Department of Justice investigate bringing criminal charges against them. That could have meant jail time for them, but nothing came of that. I also note that following all this former Virginia Attorney General Cuccinelli, who ran for governor, brought a suit against the University of Virginia for emails that Michael Mann had sent when he was on its faculty, supposedly to expose all this awful plotting. His suit failed in court.

So my bottom line is that the libertarians all freaked out that Warren is out to put them or their friends in jail are simply projecting the behavior of their own allies, especially Sen. Inhofe, who really did make efforts to jail their opponents, even when the only crime that seems to have happened in that case was the hacking of their emails, not that anybody was ever caught or charged in that matter.

Thiel is speaking at the Republican National Convention… Peter Thiel has many screws loose. He says that the last time you could be optimistic about American politics and regard it as healthy was 1920--before the granting of the vote to women and "welfare beneficiaries" put American politics permanently on the wrong track

Brad provides this from 2009. I want to pick up the following from Mr. Thiel:

the last economic depression in the United States that did not result in massive government intervention was the collapse of 1920–21. It was sharp but short, and entailed the sort of Schumpeterian “creative destruction” that could lead to a real boom. The decade that followed — the roaring 1920s — was so strong that historians have forgotten the depression that started it.

I guess Mr. Thiel does not read Econospeak as we have had several posts discussing this episode in our macroeconomic history. One on Christmas Eve 2014 by Barkley notes:

My post argued that there was monetary stimulus in 1921 and noted that even though there was downward stickiness of wages in 1945-46 and also in 1982, there were rapid bouncebacks with monetary policy in particular being stimulative during those episodes (and fiscal policy also being so in the 1982 one under Reagan).

The 1920 recession was a deliberate attempt by the FED to lower the price level via tight monetary policy similar to the deliberate attempt by the Volcker FED to dramatically lower inflation. Once the task was done – the FED reversed course which is why these two recoveries occurred. Is Mr. Thiel really telling us that the Reagan era resulted in massive government intervention? Will he make this claim before the Republican National Convention?

Wednesday, July 13, 2016

Crying "bully!" is the new red-baiting. Now that Bernie Sanders has finally stopped bullying Hillary Clinton -- by endorsing her -- the nefarious BernieBro mob has crossed the Atlantic to harass and intimidate neo-liberal, corporatist war-mongering Blairites.

The latest outrage against civility was vile left-wing fiend Jeremy Corbyn having the temerity to VOTE in a Labour Party National Executive Committee decision on whether to have a secret ballot. According to NEC member Johanna Baxter, Corbyn's vote was an endorsement of bullying. Say what?

The leader of the Labour party voted against the proposal that we conduct our vote in private in order to protect NEC members who were receiving threats, bullying and intimidation. He voted against it. He endorsed bullying, threats and intimidation, by the fact of that vote.

The only reason to vote against that is so the intimidation can continue. It’s the most shameful act I have ever seen. He showed his true colours in that vote.

The most shameful act Johanna Baxter has ever seen and this a mere week after publication of the Chilcot Report! Voting! The logic is impeccable. If you don't vote the way Johanna Baxter wants you to vote you are a bully because the only reason for voting some other way is to endorse bullying. Well that's obvious. It couldn't be about accountability.

Of course, the "you're a bully" troll card can only be played effectively by those who have the media megaphone. Red baiting.

Tuesday, July 12, 2016

The Conservative Member of Parliament for Spelthorne, Kwasi Kwarteng -- who just happens to also be an economic historian -- spoke with Stuart Reid of Foreign Affairs about the EU referendum result and said a very good thing (meaning, of course, something the Sandwichman agrees with):

A lot of clever people talk about the “lump of labor fallacy” and all the rest of it, but there are lots of different economic theories involved. But the perception was what drove the politics, not the economic theory. In large parts of rural England—a town like Boston, which your own town of Boston is named after—the perception was that things were changing, life wasn't getting better for quote-unquote indigenous people, and they voted against that.

...

We have a democracy. Every democracy in the history of the world will have had people losing elections saying, "The people were misinformed, the people were ignorant, the people didn't know about A, B, or C." That always happens. That's what losing an election feels like. No one who ever lost an election said, "The people were totally informed and totally accurate and made a rational choice and didn't vote for me." We have a democratic system. Now, if we didn't like that, we could have teams of experts and economists and smart people with a Ph.D., but we don't.

Wednesday, July 6, 2016

This is what was reported on June 8 as the "final result" of the California primary, with "100.0%" of precincts reporting:

With no outstanding uncounted ballots, the vote totals are 2,745,293 for Clinton (53.1%) and 2,381,714 for Sanders (46%). Bernie Sanders received a little over 52% of the 1,684,384
ballots that were either for Sanders or Clinton that remained uncounted on June 8 when the "final result" was reported. The percentage spread between the two stands at 7.1% -- down from a reported "final" margin of 12.6% on June 8.

In other election news-- just to be clear -- the Federal Bureau of Investigation will not be recommending criminal charges against Secretary Clinton, announced FBI Director James B. Comey today in Washington, following an impromptu meeting last week between Attorney General Loretta Lynch and former President William Clinton. Director Comey stressed that the exoneration of Secretary Clinton should not be viewed as a precedent of leniency that might apply to anyone else:

To be clear, this is not to suggest that in similar circumstances, a person who engaged in this activity would face no consequences. To the contrary, those individuals are often subject to security or administrative sanctions. But that is not what we are deciding now.

Monday, July 4, 2016

Paul Krugman (partly) takes on David Autor and his coauthors (co-Autors?), who found large impacts of net imports from China on manufacturing jobs in the US during the period leading up to the 2008 financial crisis. Krugman takes the position that, in theory, any loss of employment through the trade channel can be offset by more expansionary monetary and fiscal policy, so that trade deficits per se are not consequential (in this respect). He notes that policy was not expansive enough during the heyday of the China deficit, so there was an employment impact, but smaller than the one estimated by Autor et al., who don’t take into account policy spillovers.

Dean Baker takes Krugman to task for relying on unemployment rather than employment data. If you look at the number of jobs in the economy rather than the number of jobless workers looking for work, he says, the China effect is much larger. He also points in passing to the potential impact of trade on wages, an argument made powerfully by Dani Rodrik almost twenty years ago and not, as far as I know, rebutted.

Here I want to make a different point, that Krugman’s analysis suffers from a serious fallacy of composition of its own. The key point has to do with the national income accounting framework used to measure trade and capital flows, the one that’s in the back of every economist’s mind (or should be) when thinking about issues like this.

Trade is the main component of the current account and measured as net exports or imports. It’s a component of GDP, which is linked to employment through an Okun’s Law mechanism, but, as Krugman points out, policy makers have the ability, at least in part, to offset fluctuations in NX with policies to alter government spending, taxes (and therefore consumption) and investment (via interest rates). So far, so good. But here’s the thing: assuming no changes in the holdings of currency, the balances on the current and capital account are identically the same. (The capital account measures net inflow or outflow of capital—financial assets.) All else being equal, the US trade deficit with China corresponds to an equal and opposite capital inflow, i.e. borrowing.

Economists are used to thinking of the national accounts as separate boxes. You can analyze trade with China today, sleep on it, and then tomorrow you can analyze capital flows. Much economic writing treats these items as things that require some process out there in Marketland to make them equal. Not so, however: the accounting boxes are for mental and measurement convenience, but the two items are identical: they’re the same thing, the way a purchase and a sale are the same thing, not two different things.

When the US runs a trade deficit with China it is borrowing in some fashion to finance its net purchases. (I realize, of course, that the trade-and-finance system works multilaterally, and that China could exchange a portion of its dollar-denominated assets for assets in other countries, with subsequent rounds of displacement effects, but I’m keeping things simple here.) This is the same logic that we are familiar with at the individual level. If you spend more than your income, to buy a house or car for example, you are simultaneously borrowing money to cover the difference. You may be using an auto dealer’s trade credit, a bank’s mortgage facility, credit cards or some other device, but the financing in some form is identically what the purchase-in-excess-of-income means. It would make no sense to analyze the purchase and treat the financing as a separate, unrelated topic.

So back to China. How did the US finance its humongous trade deficit with that country during the glory years of the early to mid 00's? To a large extent, this was achieved by selling mortgage-backed securities to the Chinese. At the peak, a quarter of Fannie Mae and Freddie Mac loans were Chinese-held, and there is no reason to believe their share of non-GSE mortgages was much different. In other words, to purchase Chinese imports in excess of their international income (earned through exports), US consumers were building up debt, especially through mortgage finance, as a vehicle for borrowing from China.

Bottom line: the immense trade deficit during this period took the form of a housing credit bubble. If you want to analyze the impact of unbalanced trade with China you have to look at the whole thing. It’s reasonable to ask, what would have been the economic effect of these deficits if they had been financed differently—through larger fiscal deficits, for instance, or more corporate debt or some other channel? It’s not clear how policy choices could have made this happen, but hypothetical counterfactuals, as Krugman noted in his blog post, are the right way to go.

The big picture, from my point of view, is that the US is a chronic deficit country and has been since the 1970s. It has not developed an export capacity capable of generating income at a level comparable to its somewhat-full-employment import demand, but it has been very successful at generating financial assets that foreign wealth holders wish to accumulate. (During the final phase of the housing credit bubble this foreign demand was nearly all official.) To repeat, these are not separate events; it’s one event seen from two perspectives. China is an important part of this story, but we can’t understand how it connects to US economic development, including employment effects, by looking only at the spending side and not the financing.

Sunday, July 3, 2016

The irony is that the expert/voter division of responsibility is supposed to occur along the lines of the distinction between facts and values. According to this mystical fact/value scenario, the voters determine the ends and the experts then advise the government on the means to achieve those ends.

No, seriously. Stop laughing! Assuming that experts were correct in their assessments of the economic consequences of Brexit, who is to say that instead of ignoring the experts, the voters simply gave a lower priority to those facts than to other values?

I'm not suggesting that is what happened. No, the experts have disgraced themselves with self-serving "absolute" distinctions between fact and value that they transgress with impunity but that insulate them from ethical critique. The experts make a habit not only of ignoring non-experts but of ridiculing them -- and bragging about their condescension:

As the derisive name suggests, it's an idea economists view with contempt... -- Paul Krugman

Do you hear that, voters? The experts view your ideas with contempt. They brag about viewing your ideas with contempt. They plagiarize each other bragging about how much contempt they have for your ideas. Now what are going to do about it? Just ignore them?

On the other hand, there are also some experts' ideas that other experts have critiqued and refuted. Rather than view those refutations with contempt, the former set of experts simply ignore the latter's critique. Here are my candidates for experts' ideas -- old and new -- that voters ought not only to ignore but to positively view with contempt because their promulgators have demonstrated contempt for basic standards of scholarship:

Saturday, July 2, 2016

Well, all those experts forecasting general global economic collapse after a Brexit vote look kind of silly. Ha ha ha! So stocks around the world crashed hard the days right after the vote (Italy's market down more than 15% on the day after), but this past week they have pretty much gone up everywhere quite vigorously, in many countries now higher than before the vote. Even in Britain, the most closely watched index, the FTSE-100, has seen its largest five day rise since 2011 and is now more than 3% higher than it was the day before the vote. Yeah, the pound has gone back down to around $1.32 from $1,50 on the day of the vote, after bouncing back up to nearly $1.40 from an initial low after the vote of $1.31. But, hey, that lower pound should help prevent recession by expanding exports and keeping out imports. And with Mark Carney, the Bank of England governor, promising looser monetary policy on Thursday, and Chancellor of the Exchequer, George Osborne, abandoning his heightened austerity to stave off deficts, we can expect more stimulus from a still lower pound, not to mention no fiscal austerity. Why things are just peachy keen! Brexit-Schmexit it is!

Ah, but then we have things going every which way to the point that it is hard to see which way is up. The positives seem to be driven by the negatives. So, the British pound falls in anticipation of a decline in exports in the future to the EU, with this supposedly leading also to a decline in foreign direct investment by companies wanting access to those EU markets. But then this decline looks to increase exports and maybe even foreign direct investment to take advantage of this export-led growth. Which is it or will be? Indeed, the picture is pretty muddied. While the FTSE-100 has increased, it is noted that it consists mostly of large firms involved in exporting. In contrast, according to the Financial Times Weekend, the much less watched FTSE-250, with more firms focused on the domestic market, while rising in recent days from a low around 15,000 is only at about 16,000 compared with about 17,400 on the day of the Brexit vote. Furthermore, the FTSE bank stock index is going nowhere around 350 after rising from a low of 340, compared with about 420 on the day of the vote. But, hey, the more it looks like the British economy is going down, the more it looks like it is going up!

More of this confusion is the optimism arising from Carney's negative assessment on Thursday as well as Osborne's fiscal policy cave on Friday. Wow! There will be monetary stimulus and an even lower pound! But in fact Carney is forecasting if not outright recession then much slower growth, with some of that already happening. So, according again to the FT Weekend, Carney cites among items declining right now to be auto sales, property deals, and business investment. Hmm. And all the FT commentators are calling for UK not to start the actual exit process by holding off invoking Article 50 of the Lisbon Treaty, even as all their European counterparts are requesting that they get on with it to reduce general uncertainty. But this view in UK involves those who think the Brexit should be completely undone by a new referendum, such as Gideon Rachman, those who think that probably won't happen but wish it would and are fearful of all the negative consequences they see, such as Martin Wolf, and even those who support the Brexit, such as Chris Grayling, who is all keen on "the City" getting out from EU regulations, but thinks that "the divorce" must be approached "calmly and methodically," presumably with lots of preliminary negotiations prior to any invocation of Article 50, again with all these commentators simply choosing to ignore that the other EU nations are not at all in a mood for this shilly-shallying.

Then we have the problem that in fact that nobody in the pro-Leave group has put forward any sort of plan, much less one that other EU nations would agree with. With David Cameron resigning and his successor yet to be selected (although that will probably happen soon), and Labour Party leader, Jeremy Corbyn facing strong demands that he resign, one FT writer notes that Britain "has no Plan, no Leader, and no Opposition," a fine howdy-doo indeed. Which way is up is even less clear.

Let me finally note that almost nobody in Britain is talking about the coming loss of EU regional development aid to Britain. While Britain almost assuredly pays more to the EU than the EU pays back (the amounts involved a matter of debate, although it is clear that the net difference claimed by the pro-Brexit group has been much exaggerated), what Britain receives has been heavily directed at its poorer regions, with in some of them very little capital investment occurring that has not been supported in recent years by such aid. It is hard to get exact numbers on this, although regional development aid has been about a third of the EU budget, about the same as its support for CAP. However, for Wales alone, an area that voted for Brexit with 52%, it is slated to receive about 1.5 billion pounds in aid from the EU during 2016. What is striking to me is how little this fact has been publicized. I think that those in these poorer areas of the UK who have voted for Brexit have no idea what they are about to lose. But,hey, Brexit-Schmexit! What goes down must go up!

How else to describe the publication of this bit of drivel on the political self-identification of college professors? The author, a political scientist at Sarah Lawrence (and Hoover fellow) who used data from the Higher Education Research Institute, claims that the biggest driver of the leftward shift of the professorate is the cataclysmic transformation of New England, where the ratio of liberals to conservatives exploded from 5:1 in 1989 to 28:1 in 2014. Twenty-eight to one! This is across all disciplines and all types of institutions. Pretty astonishing, huh? And nothing like it shows up in any other region of the country.

Now, if I found myself getting numbers like that, the first thing I’d do would be to check under the hood. What’s the overall sample size, and how much of it is from New England? And then I’d get more detailed: what’s the sample frame—how exactly did the surveyors identify the individual professors who got surveyed? Response rates? And are there any indicators that might point to data errors? (Data errors are not unheard of. I worked a couple of years ago with data from one of the most internationally respected survey outfits, and after some email back-and-forths it became clear that there were significant errors for one of the countries in one of its samples.)

But there was no checking the Times story. The author provided no link to a longer technical paper or to the original data set. And the text itself supplied exactly zero information on sampling, not even the N. You’re supposed to take it all on faith.

To return to the heading of this post, the real fault lies with the editors at the Times. Careless or disingenuous authors, some with academic credentials, are a dime a dozen. Work at perhaps the world’s most influential newspapers and you’ll get a flood of these half-baked manuscripts. It all comes down to editorial judgment, and there was a big-time failure in that department.

Friday, July 1, 2016

...asks Jean Pisani-Ferry at Project Syndicate. "Why this angry attitude toward the bearers of knowledge and expertise?" he implores. He then speculates on a number of reasons. I would like to suggest a reason that Professor Pisani-Ferry overlooks.

The "experts" systematically ignore the experts. For example, Pisani-Ferry recommends that economists take a more granular approach and:

...economists should move beyond the (generally correct) observation that such distributional effects can be addressed through taxation and transfers, and work out how exactly that should happen. Yes, if a policy decision leads to aggregate gains, losers can in principle be compensated. But this is easier said than done.

Except that this observation is not "generally correct" -- it is unacceptable nonsense. The so-called compensation principle has been studied to death and found to be utterly invalid. Never mind, though, it would be convenient for the experts if it was "generally correct" and if the losers could "in principle be compensated" and that's all that really matters.

Give it a try. According to today’s New York Times, here’s Jeremy Corbyn on the respect the British Labour Party owes to its Jewish members and supporters:

Mr. Corbyn said at the event that assuming that “a Jewish friend or fellow member is wealthy, part of some kind of financial or media conspiracy or takes a particular position on politics in general or on Israel and on Palestine in particular, is wrong.”

He added, “Our Jewish friends are no more responsible for the actions of Israel or the Netanyahu government than our Muslim friends are for those of various self-styled Islamic states or organizations.”

Does this sound antisemitic to you? According to the Times, the comments “provoked outrage”. Angry denunciations in Britain and Israel take up several paragraphs, countered only by a cautious clarification from Corbyn’s staff. That’s one point of view; let me offer another.

I’m Jewish by background and highly sensitive to antisemitic remarks and innuendos. I’ve quit organizations in the past because I found their atmosphere demeaning. If antisemitism was the “socialism of fools” a century ago, it is sometimes the anti-imperialism of fools today. But for the life of me, if this remark is correctly quoted, I can’t see why anyone should complain about it.

The Times inserted what it saw as a correction about the “self-styled” reference to states or organizations that claim to act in the name of Islam, but I think I understand where Corbyn is coming from, and where his comment leads.

Various governments, government wannabees and armed sects tell us that they represent Islam, and that any attack on them is an attack on all believers. Well, they can say that: this is what self-styled means. But saying something doesn’t make it true.

And the same holds for Israel. Its government claims to represent and speak for all Jews everywhere; it’s a self-styled Jewish state. But Jews in Britain, the US or anywhere else are not bound by this. They are not Israelis, and they are no more represented by Netanyahu than by Putin, Xi Jinping, or King Salman for that matter. Is disputing Israel’s claim to represent all of the world’s Jews antisemitism? I think Corbyn was indirectly laying down that challenge, and he’s being punished for it.

On July 1, 1916 about 60,000 British soldiers died in the opening day of the Battle of the Somme in northern France in World War I. It was the bloodiest day in the entire history of Britain. While there is no reason to expect a full return to such bloodiness as a result of it, I see a bit of irony that the Brexit vote happened eight days prior to this centennial. Let us hope indeed that the voted does not presage an unraveling back into serious warfare in Europe, with or without Great Britain.